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03/26/2006

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Arun Khanna

The problem is individual citizens in France don't grasp how the inefficiency of existing labor laws impacts them.

I suggest French government commission an independent economic study of how many new jobs are estimated to be created by more flexible labor laws (and how much extra tax revenues would be generated). Based on those findings the government should send 'pseudo hiring letters' to unemployed young French workers (randomly selected and equal to workers who could have been hired). The letters should state that the person could have been hired if the existing rigid labor market rules had been changed.

Similarly, each year 'pseudo tax refund' letters should be sent to taxpayers stating the amount of lower taxes the person would have paid if the existing rigid labor market rules had been changed.

Dan C

Reminds me of the book, Bless the beasts and children. One teenager character fears that all the good protest issues will be gone by the time he starts college. He will miss out on the energy, camaraderie, and girls that go with heartfelt demonstrations. The desire for a cause to give his life a meaning.


Labor markets in France need to be reformed, like political markets in Illinois need to be reformed, yet a majority in both markets cling to the belief that they have a vested interest that benefits them in the current system. In part, I suppose it is because neither group beliefs that the alternatives will improve their situation.

Look at school vouchers, I am surprised how many parents belief that vouchers may help the talented escape a poor school system but that vouchers will do little for the average child ñ children like their own.

Change is difficult, worse then anything but stagnation.

sam vinson

Perhaps some attention should be paid to the macroeconomic policies of Western Europe. Significantly lower taxes on the Reagan-Bush model would support less efficient employment practices. The Euro agreement makes that difficult because of the obsession with balanced budgets. It just might be that the lack of discipline in our fiscal system--or the democracy of it--raises income sufficiently that people do not rely on shortsighted decisions like guaranteed jobs to better themselves.

Paco

Dear Professor Becker:

It appears that the student riots in France are further empirical evidence (if any were needed) that people are self-seeking actors and that once an entitlement is granted by the state, it is very difficult for it to take it away.

Tracy W

I vaguely recall once reading an article in an economics journal that presented a model that argued that legally-set probation periods were bad for employment, as it created an incentive for employers to fire someone just before the probation period expired - even if that person was a good worker.

From vague memory, it turned out that under a plausible range of assumptions, the risk of them not turning out to be a good worker once they'd gotten tenure and the benefits of maintaing flexibility outweighted the benefit of keeping a worker who had shown themselves to be a good worker.

If this is the case, the Parisian students might indeed be being rational in a purely self-interested way. They are the most likely to get jobs, and they would lose from a loss in job security.

Laurent

Very interesting post, as usual.

Living very close to France and used to watch French TV I have the feeling that most people in France are against the new French employment law because ... most people are against this new law.

Is is why I feel it might be insightful to try to analyse the riots and strikes in France with the framework you developped with Kevin Murphy in your book "Social Economics".

Brandon

Paul Romer offers some interesting observations about youth unemployment in France -- http://econblog.aplia.com/2006/03/bringing-french-unemployment-picture.html

Fat Mike

I'm not insane, I'm not bummed out
I got no one to blame, nothing to change
I got no evil to fight

Obe thing's for sure, I'm all outta angst
society don't bother me
and there's something wrong with that

So I'm off to Pakistan, Learn the laws of Islam
Fundamemtalism, forget that rock-N-roll
No cigarettes, no drink, In fact
It's difficult to think about getting laid
When you don't even get to see her face
I'm not insane

I'm not insane, I'm not liquored
I got nothin' to do, Nothing to lose
I got no place to call home
One thing's for sure, I'm all outta angst
Society don't bother me, there's something wrong with that

Next stop Mongolia
Don't get to golf or bowl with ya
Thown out that handicap
No stepping out till spring, In fact it's
defficult to sing when it's 20 below
and that's during the day
I'm not insane

thibault

It would be interested to hear from a french student, in favour of this new law... Here i am...


The main problem in france is the lack of self-confidence, and the bad expectations everyone has because of the crap government, of the so so economic results...It freezes french economies, and french people are stuck thinking that what we had before was better, and therefore changes are mistakes...

First, i had a question? how come you have data on the employment of muslims in france, when these etnical surveys are forbidden in France? Is it an estimation? Who gave you these features?

Second, you 've forgotten two elements : credit markets, and housing markets.

And have you tried to look for some place to rent or any credits to help you start a family when you're 24? It is true taht some part of the population is riotting because changes, and liberal changes are considered like evil, and that french are somehow quite lazy and coward. Some others are riotting because they know taht this new contract won't help them to begin with life as "an adult" : and more precisely they will be excluded from the credit and housing markets (simple adverse-selection model when the principal is risk-averse).

But they might not think about what is the french economic situation nowadays... When there is no money in the wallet, work and earn some more to be able to feed the family... (The US sometimes forget this mere fact...)


Last question : Do you really believe that we can model and predict how french muslim students will be part of riots by economics ?

Mike Wells

The arguments Becker and Posner make are persuasive but the characterization of the demonstrations as "riots" is a big exaggeration. There are a few criminals in the crowd, but the vast majority of the people who take part are peaceful.

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